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Summary The economy in the FRG
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This document provides a summary of key facts regarding the economy in the FRG. It contains important information, including the economic miracle, the Oil Crisis and more.
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Creating a social market economyEconomic recovery 1945-55
- Allies banned war industries and restricted outputs of war-related
industries because they didn’t want Germany to start another war
- Massive refugee problem with constant movement of people — 10 million
Germans came from the east, and so rationing had to be introduced
- Marshall Plan 1948 set o the creation of the Deutschmark which
stabilised the economy and stagnated the Black Market
- Wages increased which stimulated economic recovery
- The Soviet zone set up its own currency which increased tensions
- The Bundestag passed the Equalisation of Burdens Act 1952 which
introduced a tax on all assets to be used to help people who had lost
everything during the war
- Factories and businesses could start trading again but had to train workers
and replace machinery
- Unemployment rose to 1.8 million by 1950, however, soon industry started
to improve and employment rose again
- Some feared that the move from a command economy to a social market
economy would bring about the exploitation of workers and as result,
Erhard faced opposition from unions, the Economic Council and the
Bundestag
- The social market economy had the backing of the USA but not from all
industrialists who had bene tted from cartels and price xing of the
command economy
- Erhard, with the promise that the economy would provide a safety net for
the poorest, convinced enough supporters in the Bundestag to pass his
policies
- Erhard encouraged the setting up of trade unions and in 1951, introduced
the policy of co-determination, allowing for workers representatives on
managerial boards in industry
The economic miracle 1955-66
- The 1950 war in Korea sparked a need for war supplies which the FRG
were big producers of
- Many businesses had recovered su ciently by the mid 1950s to invest in
new, more modern equipment and new factories
- Reputation of German goods improved and exports grew
- Businesses were making more pro t and so could invest more and employ
more workers
- Volkswagen were successful and by 1960, there were 500 VW dealerships
in the USA and half a million had been sold
- During the 1950s, about 3.6 million more workers came to the FRG from
the GDR, many of them skilled professionals and actively seeking work for
low wages
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